Diamonds & Dogs: We want 51% shareholding in all pregnant women!
Diamonds n Dogs is worried that the country will soon indigenize all poverty, indigenize all ZESA blackouts, indigenize all burst sewer pipes, indigenize all potholes and even pregnancies.
Diamond: Zimplow
The diamond status has nothing to do with the share’s performance the past week. It is really to do with the acquisition of a significant stake in TPH.
This idea of being the largest maker of communal farming equipment doesn’t appeal to Diamonds & Dogs. You see, Diamonds & Dogs grew up in rural Chivhu at Huchu Village and was there till after A Level.
He knows pretty well that the ox drawn plough that the family owned was bought before he was born and Diamonds & Dogs had to replace it in 2009 when he was 29 years old! That equipment has a long cycle except chivhiri & muromo wegejo that are replaced every season…supposed to at least!
The volumes are not really there and after RBZ Agriculture mechanization programme of the quasi fiscal days, the future was bleak for Zimplow.
Diamonds & Dogs can only say the TPH opportunity came at the right time for Zimplow. Mining sector is fairly doing well under the circumstances, only if government would insist Chinese miners procure equipment locally.
Construction will pick up some day and at least there is hope now for Zimplow.
A colleague of Diamonds & Dogs was however worried for his compatriot Charles Nyambuya, MD of TPH. Is he going to stay on? Ordinarily, acquisitions seek to derive maximum cost savings and sweat all the potential synergy benefits. Zondi Kumwenda is so loved by this “gullible” market (not that he has done anything wrong, the hype seems just overrated) and no doubt many investors would want him to stay own.
But then will he be able to lose the ox drawn plough mentality to the side tipping heavy mining trucks with a wheel that Zondi’s 20 oxens put together can’t pull?
It will also be interesting to see how the businesses will be integrated going forward.
One thing that comes out of this TPH/Zimplow transaction is that good companies are always easy to dispose because potential investors can see the value in them.
Most likely Astra will be the next to go.
Diamonds & Dogs however feels sorry for the financial advisor who got the Cairns Disposal Mandate. He is not sure of Homelink though he is quite convinced that if he were in UK, he would use Western Union and nothing else.
Maybe there are some good assets in Homelink like those houses in Mainway Meadows that no one really knows what’s going on there.
Dog: Indigenisation
Diamonds & Dogs doesn’t hate indigenization at all. The war of liberation was all about political and economic independence.
If he had a cash pile, he would be the 51% local partner in all the well run companies. Everywhere a multinational entity goes, it is literally standard practice to have a local investor as a partner.
However, Diamonds & Dogs thinks that this law should be applicable in industries where the local shareholding should have high impact on the economy and society…like the mining sector typically.
In fact, indigenization and empowerment of local investors is the new world economic order. Look at what’s happening in South America. Initially everyone thought it was only the “crazy” Hugo Chavez but Argentina did it too with the nationalization of the Spanish oil company YPF.
Governments worldwide are now demanding a bigger share in their natural resources to stop the plundering that have been going on for decades.
Whether this is done through 50% mining taxes or stratospheric mining fees and royalties doesn’t matter.
Where there is a problem is when sectors that are not for profit also get localized.
Really, what’s the benefit of localizing a school? Everyone has cast in their memories the mess that Zimsec created when the country exited Cambridge run exams. Even up to now there is concern that Zimsec is still letting the country’s education down.
Education is supposed to be a differentiator of the high, average and low performers. These days 20 points at A Level is so common.
Now we want to localize ownership of the same schools. Diamonds & Dogs though the education sector is one of the few that that locals have been doing well in terms of easy set up and some have already established good reputation in terms of pass rates e.g., Maranatha, Tynwald.
Is it really an issue of wanting local empowerment or someone’s kid failed to get a place at one of the the prestigious schools?
If you look at the ownership of some of the high profile schools they are actually run by churches e.g., Peterhouse (both boys and girls), St Georges, Hartman & St Michaels, Dominican Convent, St Johns (green blazer), St Ignatius, Andersen, etc.
There seems to be an obsession with ownership of everything despite the glaring short comings of what we already own…Banks locally owned are going down, companies are getting liquidated etc.
Why not achieve the same objectives through avenues like taxes, community development and so on.
DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor Diamonds & Dogs nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other Indices quoted herein are for guideline purposes only and sourced from third parties.
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